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Who’s holding India’s gold?

There’s an interesting report in the press this morning about the whereabouts of India’s gold reserves. The Reserve Bank of India holds around 600 tonnes of the stuff. Not a surprising figure if compared to the International Monetary Fund’s 3,217 tonnes, the US’ 8,133.5 of reserves and China’s 1.054.1 tonnes. T

here is more gold in India than the bullion held in the RBI, however. According to reports, three of India’s largest non-banking financial corporations hold 220 tonnes of in reserve. Although the RBI’s gold is all in 24 carat bullion bars and the remaining gold held by the NBFC’s is as pure, this is still a significant portion of the national wealth. Also, the gold held by the NBFCs is loaned to them against mortgages. These against-gold finance companies accept jewellery as pledges in return for a mortgage or loan. Gold is seen as a failsafe investment, however spiralling gold prices – analysts forecast it will reach $3,000/oz soon – have had an adverse affect on loans against gold. The gold price in 2000 was $300/oz. As a result, finance firms are cautious that the price may soon drop and are lending more conservative.